Demand expected to outstrip supply for years to come

LOVELAND — The dearth of homes for sale in Northern Colorado can perhaps be characterized in one statistic: There are more Realtors and appraisers in the Information and Real Estate Services region than there are new homes for sale.

”There’s not a lot of pie to go around,”  said Robbie Miner, broker associate and partner with Sears Real Estate in Greeley.

Miner was part of a panel discussion Tuesday morning, March 5, at BizWest’s Northern Colorado Real Estate Summit at the Embassy Suites by Hilton. Joining him on the panel were Ron Harding, an appraiser with Northern Colorado Appraisals, and Lauren Hansen, CEO of IRES. Eric Thompson, president of Windermere Colorado, moderated the discussion.

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They gathered to discuss the implications of the low housing inventory on the marketplace.

Hansen said she has 7,000 users of the IRES system in an area that includes most of northeast Colorado, including Larimer and Weld counties. That number has grown from about 4,800 in the past 10 years, she said.

A third of the membership has been in the real estate business for two years or less, she said.

She displayed charts showing how inventory of real estate for sale has gone up and down, with the predominant trend being down. She said the region is seeing the impact of new construction, but it hasn’t been enough to meet demand, and what is available comes at a high price point. Inventory under $400,000 in purchase price has declined significantly, she said.

The median home sale price in Fort Collins is $409,000, $390,000 in Loveland/Berthoud, $492,000 in Estes Park (up 12.7 percent year over year) and $300,000 in Greeley/Evans.

On a national level, median home prices are increasing about 2.2 percent, considerably less than in Northern Colorado.

Growth areas for new homes often are in smaller communities, where land is more available and at lower prices. The most new homes sold last year in the region was in Severance, Miner said, with 417 new-home sales recorded in IRES last year. Close behind was Windsor, with 346 units sold. Those two communities accounted for about half of all new homes sold last year in the Weld/Larimer county area.

In Northern Colorado, new-home sales account for about 20 percent of all home sales.

Miner said that home developers “are doing a good job right now, but there aren’t enough of them.”

Home affordability in the new-home market is affected significantly by price of land and water. “People are fighting over C-BT [Colorado-Big Thompson Project] shares. This affects affordability,” Miner said.

Miner said he is most concerned about the medium-sized builder who might construct between 20 and 80 homes a year. That builder is unable to keep enough lot inventory to maintain operations over years, unlike the large builder that buys land in 100-lot parcels.

“The middle-size builder doesn’t have enough runway to sustain operations,” he said.

With inventory of homes for sale at such limited numbers, the panel said that sellers can get the best prices by keeping their properties in good condition.

In fact, condition may be one of the most important factors that the appraiser considers, said Harding, who has appraised homes in Northern Colorado since 2010.

“We look at whether the home has been remodeled or updated or not, whether it is clean. Don’t make the appraiser nervous” [because of the condition and cleanliness,] he said.

All appraisals of the same property by different appraisers should come in within 5 percent of each other, Harding said. An audience member said he has seen differences in appraisals when solar features are involved. Hansen said national statistics suggest that solar can add $10,000 to the price of a home. The audience member said one appraiser will add 50 percent of the installed price for solar to the valuation and the next might not add anything.

Harding said appraisals can be challenged but need to be challenged with the lender, not the appraiser. The appraiser works for the lender, not the seller or the Realtor.

When asked what the big winners would be for 2019, Miner said “smaller product with quality finishes” would be popular. Also, attached dwellings such as townhomes and condos “are the bread and butter of the market right now.”

But regardless of what is being built, the panel expected that demand will eclipse supply for years to come.